THURSDAY MARKET CLOSE: FTSE jumps as US taper finally starts

The London market surged in the wake of the landmark decision by the US Federal Reserve to scale back America’s massive economic stimulus programme.

With the Fed also pledging to keep interest rates near to zero for the foreseeable future, the FTSE 100 Index followed major gains on Wall Street the night before by climbing almost 1.5 per cent, or 92.62 points, to 6,584.7.

William Nicholls, a junior dealer at London Capital Group, said: “It’s clear that the tapering was priced in to a large extent and there appears to be palpable sense of relief that the much talked about Fed action has finally taken place.”

Even retailers were ahead as they pared some of the losses suffered in recent sessions on fears that fierce competition on the high street was set to squeeze margins this Christmas. Sainsbury’s was 0.9p higher at 366p, while Marks & Spencer crept 2.7p up to 444.2p after suffering a previous fall on the back of a downgrade from broker UBS.

But G4S fell by 2 per cent, or 4.8p to 248.9p, in the wake of a second referral to the Serious Fraud Office (SFO), this time after the Ministry of Justice uncovered further problems with two contracts for facilities management in the courts. The UK government department said it does not have evidence to confirm that dishonesty has taken place, but after seeking legal advice referred both matters to the SFO.

It comes on top of a criminal investigation into G4S and rival Serco after they overcharged for tagging offenders, some of whom were found to be dead, back in prison or overseas.

Serco said that it had agreed to repay the government £68.5 million, but shares rose 27.8p to 476.6p following steep falls in recent weeks.